There are times when you cannot wait until your next paycheck and you simply need to have a little bit of extra money now. Although payday loans serve their purpose, they should typically be used as a last resort if you are in need of extra money. Recent settlements by the FTC show why payday loan companies often have a bad reputation.
Two men who set up a fake payday loan site were taken to court by the FTCÂ for scamming consumers out of hundreds of thousands of dollars thought their website and forced to pay over five million dollars in a settlement. Although these men were caught in the act, the truth of the matter is real payday loan companies are often not much better places to get money.
The interest charged on payday loans can quickly add up. If you are already struggling with money coming up with the extra income to support a 25-30% interest rate on a loan can be nearly impossible. For people living paycheck to paycheck, payday loans can be a disaster. The interest that builds up from these loans can cause some to file for a Minneapolis bankruptcy.
The Minnesota bankruptcy process is lengthy and it causes a stain on your credit record that is very hard to overcome. Although it is a necessary option for some, if you can avoid filing for bankruptcy most financial experts would advise it. You should always try contacting your creditors before you file for bankruptcy. Often times they are willing to work out a payment schedule that works for you. After all, in a bankruptcy they will often be forced to forgo any payments. It works out much better for both you and them if you simply pay them back over a slightly longer period of time.